Finding the best home loan

When it comes time to look into mortgages it pays to search as many avenues as possible.

  • Gather information: All loans require basic information so it makes sense to gather the documents etc. for the preapproval process. This includes banking, checking, savings, investment information; debt obligations – credit cards, car loans, student loans child support, etc.; two years of tax returns – W-2s, 1099s, etc,; employer and salary and employer information; down payment information.
  • What kind of loan: Fixed rate, adjustable-rate loan (ARM), Federal Housing Administration (FHA), VA loan, Other (USDA Rural Development loan. Bridge loan, etc.
  • Investigate lenders: Big banks, neighborhood banks, credit unions, savings and loans, online mortgage lenders, provate lenders

Millennials finances improving

A new survey of 1,000 adults born between 1981 and 1996 shows that they are earning more and are confident that they will be able to purchase a home in the near future.

Much of the improvement in earning power comes from women who are making more money than women of older generations. Today’s millennial women are focusing more on careers at a younger age while postponing marriage and having children.

Only 10 percent of those surveyed said they would have to have help from their parents to get a mortgage down from 17 percent a year ago.

Singe-family home construction increases

In a bit of good news for the real estate industry – and those looking to purchase a home – single-family home construction increased in June, although not nearly enough to meet buyer demand. According to the U.S. Commerce Department, a drop in multi-family startups meant that total housing starts in June were 0.9% lower than a year ago.

Single-family construction increased by 3.5% in June to 847,000 units while multi-family startups dropped by 9.2% to 406,000 units.

Builders again cited labor and lot shortages as well as rising costs of building materials for the general shortfall.

Foreign real estate investing continues to decline

Since 2017 residential home purchases by people outside of the United States has essentially been cut in half, dropping from $153 billion to $78 billion in 2019.
Analysts cite two main reasons for the steep decline:

  1. The slowdown in the global economy – particularly China, which is the number one investor in U.S. real estate but has declined by over 56 percent in the last two years. The other top countries include Canada, India, the U.K. and Mexico.
  2. The U.S. dollar remains strong, making it more expensive for foreigners buying in other currencies.

Cutting FHA insurance premiums for first-time buyers?

The US House of Representatives has approved a bill that cut the cost of upfront mortgage insurance fees on FHA (Federal Housing Administration) loans for first-time home buyers. The bill still has to pass the Senate.

The bill states that first-time buyers who attend a housing counseling program can qualify for a 25 basis point discount on FHA mortgage insurance loans.

The idea is to improve the financial literacy of first-time buyers and has the support of the Department of Housing and Urban Development.

Rent or buy?

These days both are expensive propositions, especially in the Bay Area. According to a recent report by CNBC News, it is currently cheaper to rent a home than to buy a new one. Which is right for you?

  • Affordability: A good rule of thumb is to plan on spending 30% of your monthly income on the total housing cost.
  • Long-term: Where do you plan to be in five years, career-wise? Buying a home is a huge investment; will you be able to afford it in five years?
  • Maintenance: Upkeep of a house is not cheap and must be factored in to monthly expenses.
  • Emotions: Just because everyone in your circle seems to be buying a home doesn’t mean it’s the best decision for you at this time.

Millennials are moving – away

The trend has been going on for a while now so it’s not really big news but more and more millennials are finding themselves priced out of the Bay Area. In a recent poll, more than 60 percent of those surveyed under 30 said they expect to leave the Bay Area in the next few years.

The other trend, of course, is living in the home in which they grew up – with their parents. Nearly 36 percent of Silicon Valley adults between the ages of 18 and 34 were still living at home in 2017.

High home prices, low inventory, and soaring rents are all continuing to contribute to this situation with no end in sight.

The stress of selling a home

It is said that selling a home is one of modern life’s most stressful experiences – often cites as second only to a relationship break-up. And the stress seems especially severe for millennials and baby boomers with 36 percent saying the experience left them in tears.

In a recent Zillow survey, 70 percent stressed over setting the right price, 69 percent worried about the time frame, and 65 percent were concerned that the deal would fall through.

Of course, selling a home is often accompanied at the same time with buying a home which only increases the pressure. A full 70 percent of those surveyed admitted that they mistimed the process with the sale of their home taking longer than expected.

A new trend? Sales and prices declining

The National Association of Realtors recent release of April’s housing data shows that nationwide the supply of houses for sale increased by 1.4 percent over March and 5.8 percent over March 2018. However, even with more inventory sales declined 0.4 percent from March, marking the 14th consecutive month of declining sales.

Several large markets saw a decline in prices as well, lead by Seattle where values dropped by 4.5 percent over the previous year.

Other top markets which have seen a significant cooling since February include San Jose, San Francisco, Los Angeles, and Portland. Meanwhile, the overall housing supply in these areas is up 40.2 percent year over year.

Choosing a realtor

When considering selling your home, the first important decision you’ll make is choosing a realtor. Here are a few important factors to consider:

  • Background and experience: obviously background, education, and experience are important but don’t overlook someone relatively new to real estate. A good support team is vital, no matter the level of experience.
  • Marketing strategy: It’s important to discuss the overall strategy for marketing your home. Ask many, many questions.
  • References and testimonials: Don’t be afraid to ask for references and testimonials, which are a great way to assess the realtor’s strengths. Also, try to get an understanding of how many clients they’re currently representing: too many and they might not have enough time for you; too few and there might a reason there as well.